News & Events

Economic Advisor: August 30, 2017
August 30, 2017


Both existing and new home sales suffered a sizable slip, while layoffs experienced a slight gain.

Existing Home Sales

Sales of existing single-family homes, townhomes, condominiums and co-ops dropped 1.3 percent in July to an annual rate of 5.44 million, the lowest monthly sales volume of the year so far, according to last week’s report from the National Association of Realtors. That said, compared to last year, July’s sales rate was 2.1 percent over July 2016’s pace.

The reason for the drop in sales? Too-low supplies of homes, which are pushing prices up, and notably out of reach of many first-time buyers, according to NAR Chief Economist Lawrence Yun.

“Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” Yun said in a public statement. “Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month.

“Home prices are still rising above incomes and way too fast in many markets,” he added. “Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”

Looking at the specifics, July’s median existing-home price for all housing types hit $258,300, which was 6.2 percent higher than July 2016’s $243,200 price tag, and marked the 65th consecutive month of year-over-year price increases. Where inventory was concerned, July’s supply of existing homes for sale dropped 1 percent to 1.92 million units, representing a 4.2-month inventory of homes at July’s sales pace. Compared to last year, July’s inventory was 9 percent lower than July 2016’s supply of 2.11 million homes.

New Home Sales

Sales of new single-family homes fell 9.4 percent in July to an annual rate of 571,000, the Census Bureau and the Department of Housing and Urban Development jointly reported last week. This marked a seven-month low for new home sales, and when compared to last year, it was 8.9 percent below July 2016’s pace of 627,000.

Once again, narrow inventory and high prices were the culprits, according to Peter Boockvar, chief market analyst at The Lindsey Group.

“There is still no pickup in sales for homes priced below $300,000, and this is where most of the first time households would be shopping in,” he wrote in a note to clients. “I repeat that the housing industry needs a moderation in home price gains in order to better compete with renting where rents increases are now moderating.”

Bearing Boockvar’s comments in mind, July’s median sales price for new homes sold came in at $313,700, and the average sales price was $371,200. Looking at supply, the estimated number of new homes for sale at the end of July totaled 276,000, constituting a 5.8-month supply at July’s sales pace.

Initial Jobless Claims

Looking at employment, first-time claims for unemployment benefits filed by the newly unemployed during the week ending August 19, notched up to 234,000, a gain of 2,000 claims from the prior week’s total of 232,000, according to last week’s report from the Employment and Training Administration. This week’s total was slightly under market expectations of 238,000 claims.

The four-week moving average — considered a more stable measure of jobless claims — decreased to 237,750, a drop of 2,750 claims from the preceding week’s average of 240,500 claims.

This marked the 129th straight week that initial claims have fallen below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:

  • Tuesday — Consumer confidence for August from The Conference Board.
  • Wednesday — Second quarter gross domestic product from the Bureau of Economic Analysis.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; personal incomes and spending for July from the Bureau of Economic Analysis.
  • Friday — Payrolls, unemployment rate, average workweek and hourly earnings for August from the Bureau of Labor Statistics; consumer sentiment for August from the University of Michigan Surveys of Consumers; construction spending for July from the Census Bureau.

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